Financial forecasting helps you understand how your business may perform in the future based on your historical financial data.
You can create forecasts for different financial areas, including revenue, expenses, cash flow, assets, and liabilities. You can also explore different prediction methods and scenarios to understand how changes in your business may affect your financial outlook.
Prerequisites
Before creating a financial forecast, make sure you:
- Have an active ELECTE workspace
- Have connected your data or imported it
- Have sufficient historical data for the analysis
Create a Financial Forecast
- Sign in to your account.
- Select Forecasts from the sidebar.
- Select Financial Forecast.
- Choose the financial data type you want to analyze.
- Select a prediction method.
- Review the forecast settings.
Choose a Prediction Method
ELECTE provides five prediction methods. The most appropriate method depends on the characteristics of your financial data and what you want to achieve with the forecast.
To learn more about the differences between the available methods, see Choosing a Prediction Method.
Review Financial Statements
Financial forecasting can also help you analyze your financial statements.
Depending on your data and forecast configuration, you may be able to review:
Income Statement
Review revenue, expenses, and profitability to understand your expected operating performance.
Balance Sheet
Review assets and liabilities to understand your expected financial position.
These views provide additional context for your forecast and help you understand how different financial areas relate to each other.
Scenarios
Adjust your revenue and expense assumptions to explore different possible outcomes, such as optimistic, conservative, and pessimistic scenarios, and see how each scenario affects your forecast.
Update Your Financial Data
If your financial data changes, you can update it through Data Management or import additional data where supported.
For example, you can add the latest month's financial data without replacing your entire dataset.
After updating your data, review the forecast to see how the new information affects the results.
Tips and Best Practices
- Keep your financial data up to date. Recent data can help you work with a more current forecast.
- Choose the right financial metric. Start with the area most relevant to your business question.
- Explore different scenarios. Comparing potential outcomes can help you understand the impact of different assumptions.
Tip: Start with a single financial area, review the forecast and key metrics, and then explore scenarios and additional financial statements for a more complete view of your business.